Banks Plan Dragons’ Den Style Fund For Small Businesses
-Britain’s biggest banks are planning to set up a multimillion-pound ‘Dragons’ Den’ style fund to bolster the country’s smaller businesses.
A taskforce comprised of chief executives from six British banks is to propose setting up the new venture capital fund, which would provide growth equity for small companies.
Using a model that mirrors BBC show Dragons’ Den, the banks will effectively own a stake in each of the companies in which the fund invests. The equity injection should put businesses on a firmer footing for a bank loan.
Each bank is expected to inject tens of millions of pounds into the fund, with some reports suggesting this could rise to up to £200 million per bank, seeing the total rise to around £1 billion.
Bosses at Lloyds, RBS, HSBC, Barclays, Santander UK and Standard Chartered formed the taskforce three months ago as part of a project overseen by the British Bankers’ Association (BBA), in conjunction with the Treasury and Department of Business.
A spokesperson from the BBA said: “We are due to present our report to the Chancellor and the Business secretary of state shortly and will then publish it in full. The report will be comprehensive and will contain important and wide ranging recommendations.”
The new fund, subject to formal approval from the banks’ boards and the Financial Services Authority, has been likened to the 3i Group model, a private equity firm formed as the Industrial and Commercial Finance Corporation (ICFC) in 1945 by the major British banks to provide funding for small enterprises.
Only a few dozen firms are expected to qualify for funding, and will have a turnover of less than £250 million. Businesses with a turnover of less than £20 million are unlikely to qualify, it has been reported by the Financial Times.
Details of the plan are being finalised and presented to Chancellor George Osborne and Business Secretary Vince Cable later this week and will be announced next week.
As well as the fund, the taskforce is expected to recommend a mentoring programme for companies, a new review process for loan applications and a commitment to providing more detailed data to small business on lending.
Sources: DailyFinance.co.uk, Press Association, Coventry Telegraph
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Tags: banks, BIP Magazine, Carly Sumner, Dragons' Den, economy, Entrepreneur, fund, Small Businesses, SMEs, The BIP
